Whitehall still knows best for Birmingham, but Boris gets devo-max

Whitehall will keep an iron grip on how councils spend £5.3 billion of regeneration cash in defiance of Government promises to devolve powers and budgets to city regions, writes Paul Dale.

It’s been confirmed that civil servants, and ultimately Ministers, are to have the final say on projects to be paid for from European Structural and Investment Funds while councils will have only an advisory role on how the EU money should be spent over the next seven years.

There is one exception to this rule. Boris Johnson, the mayor of London, will have full control over the capital’s share of European funding and can decide which schemes to approve.

The move has enraged English council leaders who say London is being given favourable treatment.

The Local Government Association has accused the Government of performing a U-turn and of backtracking on a promise to devolve decision making around the European funds directly to Local Enterprise Partnerships and councils.

Britain’s centralised approach is in contrast to the way decisions are made in Europe.

Some 20 EU countries will be setting up Integrated Territorial Investments (ITI) – single pots combining EU funds and handed to local areas to boost economic growth and jobs.

Many will also assign Intermediate Body (IB) status granting significant flexibility to the local or regional authority responsible for spending the money.

The UK approach could have consequences in Birmingham where EU structural and investment funds have been pencilled in to boost regeneration around the Curzon HS2 terminus in Digbeth.

The Greater Birmingham and Solihull LEP is likely to be granted limited Intermediate Body status, giving it control over 10 per cent of regional development money – with the remaining 90 per cent staying in the hands of the Government.

LGA chair David Sparks said direct control by Whitehall could be harmful to growth and employment prospects and risk stifling vital local projects. Cllr Sparks added:

English towns and cities should be given the same powers that are offered to London and other European cities and regions.

“It is also a retrograde step for many areas who have already secured devolved national funding through Growth and City Deals, which are likely to attract EU funding. An inability to coordinate all of this funding locally will be the Achilles heel of a lot of vital schemes designed to deliver growth.

Local areas will rightly know how much EU funding they will receive but it is unacceptable to then be told how to spend it. Projects being decided upon by civil servants with little knowledge of local areas or needs will result in significant delays to vital projects affecting hard-pressed local businesses and residents most in need of support.

Councils have proved that when they have influence over EU funds they can use them effectively to help new businesses start up and create thousands of new jobs.

It is therefore imperative that the Government reverses this decision to ensure that local areas, and not Whitehall, have the final say on how EU cash is spent.

While the Greater London Authority will have full control, every other area in England – stretching from Manchester and Birmingham to Cornwall – will have to enter long-winded Whitehall negotiations before any money is handed out.

The LGA said denying local areas – including councils, Local Enterprise Partnerships, local businesses and voluntary organisations – the power to combine funding and select which projects receive cash was a backward step and would have major consequences across the country.

Flagship infrastructure projects, employment and skills projects and local growth could be put at risk, the LGA claimed.

The LGA is calling for the Chancellor to use next month’s Budget to reverse the decision and commit to full devolution by giving local areas across the country the power over how, when and on what their share of EU funding is spent.

Councils and LEPs also need a guarantee that £106 million of available funding to cover ongoing costs for running the programme locally and helping to get projects off the ground will finally reach local areas.

Ministers are refusing to make full use of EU mechanisms to grant Intermediate Body (IB) status to local areas outside of London. This denies them the power to combine funding and select which projects receive cash. Instead, they have been downgraded to only ‘advising’ on how EU money should be spent.